Securities and Exchange Board of India (SEBI), the capital markets regulator, has levied a penalty of Rs 19 lakh on Sai Proficient Research Investment Advisory and its proprietor for a series of regulatory breaches, including deceiving investors with unrealistic promises of returns.
As per SEBI notice, the stock market regulator found that Sai Proficient made false promises of returns as high as 95%, a practice strictly prohibited under its regulations. Such exaggerated assurances, designed to entice unsuspecting investors, were classified by Sebi as fraudulent and unfair trade practices, significantly eroding investor confidence in the securities market. The ₹19 lakh fine reflects Sebi’s determination to penalize such deceptive practices and protect the integrity of the market.
Cock and Bull story
Dismissing the investment advisory firm’s defense as a fabricated “cock and bull story” and a mere “afterthought” to escape accountability, Sebi’s investigation revealed a pattern of misconduct, including non-cooperation with the inquiry and collusion with an unregistered entity to defraud the public. “Noticee submitted that she was pregnant and was in the last months of her pregnancy suffering from complications and thus, could not attend the office regularly and could not cooperate with investigation,” as per SEBI’s circular.
The Sebi order details Sai Proficient’s involvement with Shree Sai Proficient Financial Services (SSPFS), an unregistered entity operating illegally as an investment advisory service. The regulator’s investigation found compelling evidence that SSPFS served as a front for Sai Proficient Research, facilitating the collection of investor funds. Transactions exceeding ₹4 crore were traced across accounts linked to both entities, exposing a deliberate and coordinated scheme to attract and mislead investors. Sebi explicitly stated that Sai Proficient acted “in connivance with SSPFS, using it as a camouflage to lure people into its net.”
Adding to the severity of the violations, Sai Proficient failed to provide crucial documentation to Sebi during the investigation. This included essential records such as Know Your Customer (KYC) details, risk profiling forms, and client agreements. Despite repeated notices from the regulator, the firm’s non-compliance further exacerbated its regulatory breaches.
